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Can Teck Resources' 4Q17 Earnings Revive Its Fortunes?

PART:
1 2 3
Part 2
Can Teck Resources' 4Q17 Earnings Revive Its Fortunes? PART 2 OF 3

Teck Resources’ 4Q17 Earnings: What Analysts Are Projecting

Teck Resources’ 4Q17 earnings

Analysts polled by Thomson Reuters expect Teck Resources (TECK) to post revenues of 3.2 billion Canadian (~$2.6 billion) in 4Q17. It reported revenues of $3.1 billion Canadian (~$2.5 billion) in 3Q17 and $3.6 billion Canadian (~$2.9 billion) in 4Q16. The company is expected to post adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.5 billion Canadian (~$1.2 billion) in 4Q17 compared to $1.4 billion Canadian (~$1.1 billion) in 3Q17 and $1.6 billion Canadian (~$1.2 billion) in 4Q16.

Teck Resources’ 4Q17 Earnings: What Analysts Are Projecting

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As you can see, while Teck Resources’ 4Q17 revenue and EBITDA are expected to rise on a sequential basis, they’re expected to fall on a yearly basis. Let’s look at the factors that could drive Teck Resources’ 4Q17 performance.

Segments

Coking coal is the largest contributor to Teck Resources’ earnings. In 3Q17, the company shipped 6.8 million metric tons of coking coal and reported an average realized price of $159 per metric ton. In 4Q17, Teck Resources expects its coking coal shipments to fall to 6.5 million metric tons. However, it expects its 4Q17 average realized coal price to be $165–$170 per metric ton. Its copper and zinc operations are expected to benefit from higher commodity prices (EWC) (BHP) in 4Q17.

Copper prices averaged $3.09 per pound in 4Q17 compared to $2.89 per pound in 3Q17. Higher copper prices positively impacted 4Q17 earnings of miners Freeport-McMoRan (FCX) and Southern Copper (SCCO). However, Southern Copper posted a net loss in 4Q17 due to the one-time negative impact from the US tax reform legislation.

In the next and final part of this series, we’ll see how analysts are rating Teck Resources before its 4Q17 earnings.

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